Friday, 21 December 2007

RenCap to double staff in Africa and Asia

Financial News

Jason Corcoran in Moscow
21 Dec 2007

Emerging markets investment bank Renaissance Capital aims to double the headcount in its African and central Asian operations next year to 260 bankers.

Renaissance, which set up shop in Africa earlier last year, is recruiting an additional 100 bankers for its sub-Saharan hub in Nigeria's Lagos and its offices in the Kenyan capital Nairobi.

The bank is also establishing a full service investment bank in Kazakhstan's financial capital Almaty as a launchpad into other central Asian markets such as Uzbekistan. Staffing in Almaty will be doubled to 60.

Karl Franzmann, global head of recruitment at Renaissance, said the bank required investment bankers, equity research analysts and sales and traders for its new markets.

He said: "We are going to look at how the downturn will affect the bulge bracket banks. They have made commitments before to emerging markets and then pulled out. There are a lot of experienced expatriates working in New York and London and they might be looking at their options to return home in a few months time."

Renaissance will run a global advertising campaign next week in the Wall Street Journal and the Financial Times.

Franzmann said the bank's main Russian business would grow by 25% next year. "In Russia the growth will be spread across investment banking, sales and trading, derivatives and research."

Peter Vanhecke, recently hired from Dresdner Kleinwort has been appointed to head up Renaissance's bank in Ukraine.

Renaissance is also opening another sales and distribution hub in either Singapore or Hong and expanding its New York office.

A London-based headhunter said some bulge-bracket banks like Credit Suisse and Deutsche Bank had already ring-fenced their emerging market operations to protect them in the event of job losses due to the US sub-prime crisis.

He said: "Emerging market operations are usually where heads start rolling first. Banks that haven't suffered from the credit crunch can leverage the relative weakness of other banks to build their platforms."

Senior Moscow bankers suggested Lehman Brothers might be most vulnerable in Moscow to cuts. "They have struggled to gain scale and Dick Fuld isn't very keen on Russia anyway," said one.

Aer Rianta secures €1bn deal for Moscow airport

Irish Independent

By Jason Corcoran in Moscow

Firm beats off five rivals to develop duty-free services at new Russian terminal

Aer Rianta will operate 2,200sq m of retailing space in the duty-free area of Terminal 3 in Sheremetyevo where it has the rights to sell duty-free products across eight separate stores

Wednesday December 19 2007

The overseas arm of Aer Rianta has beaten off competition from five international rivals to secure a lucrative €1bn seven-year contract to develop duty-free services at Moscow's new Sheremetyevo Terminal 3.

Aer Rianta International, a subsidiary of the Dublin Airport Authority (DAA), will operate 2,200sq m of retailing space in the duty-free area of Terminal 3 where it has the rights to sell duty-free products across eight separate stores. The company has also signed a seven-year contract to operate two duty-free stores at the terminal's domestic gates.

The contract is expected to generate gross sales significantly in excess of €1bn over its seven-year term.

Eamon Foley, director general of Aer Rianta International, said the deal was a "must win" for the airport operator's position in Moscow.

He said: "It was a very competitive tender. This is a green-field site to build your own shops and to do something to show off to the world.

"It was a must-win contract for us if we were to remain the largest player in Moscow's airports. It confirms our reputation in Moscow and Russia."

Other tenders were submitted by Germany's Gebr Heinemann and Switzerland's Dufry and Nuance Group.

Foley said a new rail service connecting central Moscow to the airport in the New Year and the new terminal to house national carrier Aeroflot could revive Sheremetyevo, which has been losing business to other airports. "The new rail link will really help the airport to compete and over 12 million passengers will use Terminal 3 every year," he said.


Tatiana Zotova, marketing director of JSC Terminal, which is managing the new terminal, said: "Aer Rianta International has presented exclusive plans that will add significantly to the quality on offer in the new terminal while the company's unique experience of conducting business in Russia will ensure the highest operational standards are achieved."

Aer Rianta, a pioneer investor in the perestroika era of the 1980s, was the first duty-free operator in the country and celebrates its 20 years in Moscow in 2008. Under a joint venture with Russian airline Aeroflot and the airport, it runs duty-free shops at Sheremetyevo-2 international terminal, as well as the Irish bar and the AeroShop on-board stores.

Aer Rianta is currently negotiating with Sheremetyevo Airport over the sale of its 33pc stake in Terminal 2's duty-free business. Both the Irish company and the airline Aeroflot are interested in acquiring the stake for about $10-15m but could ultimately split it.

Aer Rianta runs duty-free concessions in Moscow's Vnukovo and Domodedovo airports, which have both been winning passengers and airlines at Sheremetyevo's expense in recent years.

- Jason Corcoran in Moscow

Monday, 17 December 2007

Staff the winners as banks race for talent in Russia

OFinancial News

Jason Corcoran

17 December 2007

Political unrest continued to play havoc with deals

Charles Ryan, Deutsche Bank: A lot of our competitors are becoming increasingly desperate because they can’t achieve scale

A war for investment banking talent in Moscow during the past year led a senior executive at Deutsche Bank in Russia to compare the hiring spree with “a French farce”.

Competition between bulge brackets and domestic banks to sign Russia’s leading rainmakers resulted in remuneration packages comparable with those of footballers. Ed Kaufman is reputed to have been lured from UBS, where he was head of Russia, to become chief executive of investment banking at Alfa Bank by a guarantee of $20m (€13.6m) over two years while managing directors can net an average $3m pay packet, according to research by US publisher Forbes.

A boom in consumer spending, oil tilting towards $100 a barrel, record numbers of initial public offerings and a high growth rate spurred the scramble for talent.

Deutsche’s Russian operation, under chief executive Charles Ryan, has been hit by more defections than most. Its top Russian rainmaker Nick Jordan left for Lehman Brothers and his investment banking co-head Ilya Sherbovich is quitting next year to start a boutique. Several colleagues followed in their wake.

Ryan, whose contract expires next year, is nonplussed by the comings and goings. He said the bank continued to rank high in the capital markets league tables.

He said: “I have seen this movie before. Moscow is not a get-rich scheme because you need to have all the pieces of infrastructure in place, like we do. A lot of our competitors are becoming desperate because they can’t achieve scale. They are playing tennis without a net.”

Goldman Sachs, Lehman Brothers and Nomura returned to the country this year having fled after the 1998 financial crisis. The entrants have yet to make an impression on the league tables, where Deutsche, Merrill Lynch, ABN Amro, JP Morgan and Russia’s Renaissance Capital dominate. Russia’s much-anticipated IPO boom petered out in the autumn thanks to a combination of the credit crunch and investor apprehension ahead of the political elections.

Politicians and bullish analysts had forecast tens of IPOs for every quarter of the year, but the summer listings of state-controlled banks VTB and Sberbank – and their subsequent poor performance – sapped liquidity and investor appetite.

Chris Weafer, chief strategist at Uralsib, predicts total IPO business will reach $40bn in 2007, compared with $33bn last year. He said: “It wasn’t quite the big banner year many people expected.”
The US sub-prime problems sparked a sell-off in emerging markets and led to Russian IPOs being postponed during the final quarter.

Rusal, the world’s largest aluminium producer, pulled its $9bn London flotation in late September and was followed by several others, including Zenit Bank, Prosperity Capital and X5 Retail.

Igor Lojevsky, head of global banking and capital markets for Russia at Dresdner Kleinwort, said: “There was supposed to be a flood of institutions coming to the market this year but it didn’t really happen. Institutions have been distracted by the credit crunch, with many Russian companies putting off capital-raising plans since the end of September.”

The arrest of Deputy Finance Minister Sergei Storchak last month on charges of attempting to embezzle $43m raised the question of whether there is a serious rift between Kremlin factions about economic policy.

Storchak, who is allied to the Finance Minister Alexei Kudrin, is responsible for the country’s stabilisation fund and some think his arrest might be connected to the debate about how to invest oil reserves.

Kudrin supports an approach similar to that of Norway’s future generations fund, while it appears the Kremlin’s statists think all the money should be made available for spending on infrastructure and to develop strategic industries.

Weafer said: “I hope it’s not an attack on Kudrin. He and his allies are seen as a stabilising pro-market force. Any suggestion that he is under attack is bad news for the economy.”

The blurring of lines between politics and business was made explicit when two oil companies, Royal Dutch Shell and BP, ceded control of assets in Russia following pressure from the Kremlin. Shell was forced to cede control in Sakhalin-2, the world’s biggest liquefied natural gas project, to gas monopoly Gazprom, while TNK-BP had to sell its giant Kovykta gas field to Gazprom.

The case of beleaguered oil company RussNeft had echoes of Yukos, which ceased to exist from November following the carve-up of its assets during the summer and the continued incarceration of its former owner Mikhail Khodorkovsky in Siberia on tax evasion charges.

RussNeft’s owner Mikhail Gutseriyev fled the country for London, claiming he was the victim of political persecution. His private company, once the country’s seventh-largest petroleum producer, was saddled with back-tax charges and was seized by a court.

Oligarch Oleg Deripaska looks set to be the benefactor of Gutseriyev’s misfortune, having applied to the anti-monopoly service to acquire RussNeft’s assets.

Deripaska, whose estimated $20bn fortune includes Rusal, one of the world’s largest aluminium companies, is Russia’s leading dealmaker of the year.

Rusal was formed this year through a three-way merger of Russian Aluminum, Sual and the alumina assets of Swiss trader Glencore.

Deripaska also emerged as a 5% shareholder in US carmaker General Motors while his investment vehicle took a 20% stake in Canadian car manufacturer Magna and sizeable stakes in European construction companies Strabag and Hochtief.

Rusal looks set to acquire a blocking stake in Norilsk Nickel, the world’s largest nickel and palladium producer, in a deal that could create a Russian national champion in the metals sector with a market value of $100bn.

Deripaska, a former Soviet army sergeant with close ties to President Vladimir Putin, still appears to be serving his country. He alarmed investors this year when he declared himself as little more than a caretaker of assets for the state.

Monday, 10 December 2007

Warnig steps down from Dresdner board

Financial News

Jason Corcoran in Moscow

10 December 2007

German banker Mattias Warnig has stepped down from the board of Dresdner Kleinwort in Russia to concentrate on leading the construction of Gazprom’s natural gas pipeline to Germany.

Warnig had remained on Dresdner’s board since resigning as chairman and becoming chief executive of Gazprom’s Nord Stream venture last year.

A spokeswoman for Nord Stream in Moscow said: “This is the private decision of Warnig to step down from the board of directors at Dresdner where he remains in contact. Nord Stream is the biggest infrastructure project in Europe and he is very much driving the project, due to start in 2009.”

Dresdner confirmed Warnig was no longer on its staff but said: “He maintains an ongoing relationship with the bank… in an advisory and consultancy basis.”

Warnig, who has known President Vladimir Putin since the early 1990s when he set up Dresdner’s office in St Petersburg, also sits on the board of Gazprom and was appointed a director of state-run bank VTB before its summer listing. Under Warnig, Dresdner became one of the most successful investment banks during Putin’s presidency.

It advised Gazprom on its $13bn (€8.9bn) acquisition of a majority stake in oil company Sibneft from oligarch Roman Abramovich and the Russian Government on its controversial valuation of Yuganskneftegaz, the main subsidiary of oil company Yukos.

It was also joint bookrunner and joint global co-ordinator on last year’ $10.7bn initial public offering by oil company Rosneft.

Nord Stream, a joint venture between Gazprom and Germany’s BASF and E.On, is building a 1,200km gas pipeline beneath the Baltic Sea near St Petersburg to the German town of Greifswald.

It last month selected Dresdner, Société Générale and ABN Amro as consultants on raising €5bn ($7.3bn) and said it would seek financing on capital markets at the end of the first quarter.

Sunday, 9 December 2007

Deutsche Bank retains lead in Russia's capital markets in 2007

Business New Europe

Jason Corcoran in Moscow

December 7, 2007

Deutsche Bank has retained its leading status in Russia's capital markets in 2007 despite being buffeted by the loss of key rainmakers and increased competition in Moscow from bulge-bracket banking rivals like Goldman Sachs and Lehman Brothers.

Deutsche, which has over 800 staff in Moscow, shed its UFG brand in October having completed the acquisition of the local brokerage late in 2006. The German bank's leading drummer-up of business in Russia, Nick Jordan, left for Lehman Brothers during the year and his investment banking co-head Ilya Sherbovich is winding down before he joins his own fledgling boutique United Capital Partners next year. Both Jordan and Sherbovich are bringing on board UFG staff to beef up their operations, but this has yet to affect Deutsche's standing in the capital markets tables.

According to data provider Thomson Financial, Deutsche is the leading equities bookrunner so far this year from its involvement in 10 issues worth over $5.3bn. Renaissance Capital is second from its share of 14 issues worth $4.3bn, while Citigroup completes the top trio with 4 issues worth $4bn. Deutsche, which has promoted internally to replace Jordan and Sherbovich, acted as joint global coordinator and bookrunner to VTB Bank in its $8bn IPO in May. It also organised offerings by the electricity suppliers OGK-2 and OGK-3 worth over $2bn and the recent flotation by real estate firm LSR worth $772m.

The head of Deutsche's Russian operations, Charlie Ryan, is nonplussed by Moscow's hiring war, which saw Ed Kaufman move from UBS to Alfa Bank for a guaranteed $15m over two years. "I have seen this movie before," he said earlier this year. "Moscow is not a get-rich scheme, because you need to have all the pieces of infrastructure in place like we do. A lot of our competitors are becoming increasingly desperate because they can't achieve scale. They are planning tennis without a net."


This year saw the return to Moscow of Goldman, Lehman and Nomura, all of which fled in 1998 nursing losses from the financial crisis and the subsequent bond default. A boom in consumer spending, oil tilting towards $100 a barrel, a record number of IPOs and high economic growth are the main reasons drawing them back.

Goldman, the world's most profitable and respected investment bank, has made little inroads yet into the Russian market. The co-heads of its Russian operation both left for local firms during the year, with Gordon McCulloch heading for Renaissance and Magomed Galaev leaving to run an oligarch's investments. Goldman is fifth in Thomson's equity table, eighth in mergers and acquisitions, and 11th in debt capital markets; Lehman is nowhere.

Other Western banks already active in Russia, such as Merrill Lynch and JP Morgan, are desperately trying to build scale in an already saturated market. Merrill is fighting tooth and nail with JP Morgan for the top adviser crown on M&A involving Russian companies. Morgan Stanley is in third and Deutsche is fourth. Overall, Russian M&A activity has more than doubled this year to a record $127bn (€86.2bn), according to Thomson's figures.

JP Morgan, which was frustrated in its efforts to buy a local brokerage, snatched a team of 16 analysts, traders and institutional sales people from Russia's MDM Bank in July. Its Russian operation has maintained relationships with state-run entities and large corporations in Russia, acting as joint bookrunner last year on the $10.7bn flotation of Rosneft and was one of the two international placement agents for this year's $8.8bn listing by Sberbank.

Germany's Dresdner Kleinwort is trying to re-establish its leading position in equity capital market by hiring an additional 60 bankers. Dresdner has fallen out of the top 22 in Thomson's equity capital markets tables in the year to date after topping the poll in 2007 thanks to its joint-bookrunner mandates on the Rosneft and TMK IPOs. In M&A, Dresdner is 18th compared with its ninth position in 2006.

Dresdner has been rebuilding since the departure last year of Bob Foresman, head of the Moscow office, to Renaissance. Foresman subsequently hired six bankers from Dresdner. Matthias Warnig, former chairman of Dresdner's Russian business, also joined VTB's board ahead of its flotation although he remains involved on a part-time basis.

A surprise new entrant in the top five is St Petersburg's own KIT Finance, which worked on five deals worth over $19m. The up-and-coming bank has benefited from close links to a number of oligarchs and is plotting its own IPO for early next year.

In debt capital markets, the Western banks with big pockets retain a stranglehold at the top of the table. Dutch bank ABN AMRO, with 14 deals worth $3.7bn is just ahead of Citigroup while Deutsche Bank is third.

Monday, 3 December 2007

Dresdner Kleinwort to hire 60 for Russian operations

Financial News

Jason Corcoran in Moscow

03 December 2007

German investment bank Dresdner Kleinwort is trying to re-establish its leading position in Russia’s capital market by hiring 60 bankers.

Igor Lojevsky, chairman of global banking and capital markets for the region, said Dresdner wants to hire between 15 and 20 bankers in Moscow and 30 to 35 in London and New York to service Russia.

A further 10 employees are being recruited for Dresdner’s new private banking operations in Moscow and St Petersburg.

Lojevsky, who joined Dresdner from Deutsche Bank four months ago, said: “Dresdner is reassessing its strategy for Russia by following where the money is. We hope to be the first port of call for the big Russian companies but we are going to focus on strategic structured solutions, the private sector and more second and third-tier companies.”

Dresdner Kleinwort has been planning to hire senior staff since the departure last year of Bob Foresman, head of the Moscow office, to Russian rival Renaissance Capital. Foresman subsequently hired six bankers from Dresdner.

In March, Matthias Warnig, former chairman of Dresdner’s Russian business, joined the board of Russian bank VTB ahead of its flotation. Warnig continues to advise Dresdner clients.

Lojevsky said: “We need a combination of senior and junior guys across the value chain. We need global distribution staff in London and New York, local sales staff and ECM and DCM origination bankers.”

However, Goldman faces stiff competition from local and international rivals in Moscow where there is a premium for talent. Headhunters said Lehman Brothers, Merrill Lynch and VTB are also trying to recruit heavily.

Dresdner has fallen out of the top 22 in data provider Thomson Financial's equity capital markes tables in the year to date after topping the pool in 2007 thanks to its joint-bookrunner mandates on the Rosneft and TMK IPOs . In M&A, Dresdner is 18 th compared to its 9th position in 2006 while their DCM showing has fallen to 11th from 7th.

Russian rail picks banks for stake sale

Financial News

Jason Corcoran in Moscow

03 December 2007

Russian railways monopoly RZD has chosen investment banks UBS and Troika Dialog to manage the sale of a 15% stake in its freight subsidiary Transcontainer.

The private placement is part of the third stage in the reform of the Russian rail sector, which envisages selling stakes worth $15bn (€10.2bn) in parent RZD and its subsidiaries on the stock markets.

RZD said it needs 13 trillion roubles (€362bn) to modernise its network. It also wants to use the 9,288km Trans-Siberian Railway to carry more container freight from Europe to Asia.

UBS and Troika beat off competition from 10 other banks which were admitted to the tender. A roadshow for sale of shares will kick off next week with the European Bank of Reconstruction and Development tipped as a buyer of 10% of shares worth $250m. An IPO for 25-30% of Transcontainer’s shares is expected to be held early next year.